Dual Faces of North Korea:
Nuclear Provocations, Spontaneous Marketization, and
South Korea’s Two-Track Approach

Keynote Speech
By Ambassador Cho Byung-jae
Chancellor, Korea National Diplomatic Academy

2017 Korea-V4 Conference
Consolidating Democracy and Market
8th November, 2017
Budapest, Hungary


I am pleased to be here with you at 2017 Korea-Visegrad 4 Conference. Since 2014, we have gathered every year to exchange views and share experience of post-communist transition.

After the collapse of the Berlin Wall in 1989, the post-communist transition in the former Soviet Union and Eastern Europe demonstrated sheer diversity, rather than convergence, along the transition path. By 2017, of the twenty-nine post-communist countries in Europe, according to Freedom House, the governments of nine were classified as authoritarian, thirteen as democracies, and seven as transitional or hybrid regimes. The progress of marketizing reforms, as well as economic performance at large, also varied in a wide margin. Indeed, the four Visegrad Group countries have outperformed others in terms of the transitional progress made in democratization and marketization. How was it possible? How were these countries able to accomplish such successful transition, when many other post-communist nations struggle and tumble in dictatorship and unreformed economy?

To the contrary, North Korea, without extensive economic reforms, has walked through its own path as a self-reliant economy combined with the world’s most reclusive political regime. It has been among the worst economic performers, stagnating for the past two decades, but at the same time, has been posing the most dangerous threat to the world.

The North Korean question today is complicated as it contains a post-communist transition issue, as well as a pressing security problem. I would like to briefly introduce you today to two contrasting portraits of North Korea – on the one hand, an exceedingly belligerent, hermetically sealed, hereditary dynastic state, and on the other, a surprisingly marketized society. Its belligerence is already quite well-known, but its societal face is relatively less known, overshadowed by the first. I intend to do this because a proper understanding of North Korea’s dual faces is directly linked to our approach towards the North Korean question.

Pyongyang’s Nuclear and Missile Provocations

There is no doubt that Pyongyang’s nuclear and missile provocations pose a pressing and present danger not only to South Korea, but also to the entire Northeast Asian region and the world. The North Korean nuclear and missile crisis has been continuing over two decades now. It is even called “a Cuban missile crisis in slow motion” (Robert Litwak of the Woodrow Wilson International Center for Scholars). North Korea has continued to make advances in its nuclear weapons program since the 1990s, conducting most recently the 6th and largest nuclear test on September 3rd and two test fires in July of intercontinental ballistic missiles with a range capable of hitting the United States.

It is notable that Pyongyang has accelerated its nuclear weapons development since Kim Jong Un took power as North Korea’s third hereditary successor in 2012. Of the six nuclear tests since the first one in 2006, four have been under his supervision. Its ballistic missile program has also made unexpected progress. In 2016 alone, Pyongyang had 24 missile launches, and as of the end of August this year, it had conducted 14 missile launches, including two ICBM-class Hwasong-14 missiles. Kim Jong Un, since his accession to power, has conducted four nuclear tests and over eighty test-firings of various kinds of ballistic missiles in less than six years, whereas Kim Jong Il, the father of Kim Jong Un, conducted two nuclear tests and sixteen ballistic missile tests during his 16-year rule.

Why does Kim Jung Un stick to and accelerate its nuclear weapons program?
The nuclear and missile tests constitute a core part of his Byungjin line, a policy formalized in the Korean Workers Party’s Central Committee in 2013, with the twin aims of developing nuclear weapons and improving the nation’s economy in parallel. Nuclear weapons development and economic prosperity are the two central pillars of the regime’s legitimacy. So far, however, he has focused primarily on consolidating his grip on the reins of domestic power and building up the country’s nuclear arsenals.

First, Pyongyang’s commitment to the development of nuclear weapons capabilities is firmly rooted in its sense of insecurity and the perception that the United States and South Korea are out to undermine and eventually overthrow North Korea’s regime. It has come to view nuclear weapons aimed to deter the United States as the ultimate guarantor of its regime security.

Second, nuclear weapons also provide Pyongyang with a bargaining chip when it eventually comes to the negotiating table. Pyongyang publicly says that it plans to force the world to accept it as a member of the Nuclear Club and eventually, to reconcile with the United States and South Korea on its terms.

Third, a series of nuclear provocations is a North Korean way, however exceptional and unusual they might be, of pursuing international recognition of its status. The Pyongyang regime is caught in its own ‘geopolitical imagination,’ in which the United States is constantly represented as the “sworn foes to the entire Korean nation.” North Korea’s existential being could not be fulfilled without the significant Other, that is, without demonizing the United States. In this Manichean geopolitical frame, North Korea is proclaimed as the leader in the fight against imperialism, while nuclear weapons are “a firm self-defensive measure against the hostile actions of the United States.” The Pyongyang regime aspires to project itself onto others as a ‘powerful, if not prosperous yet, state,’ with equal standing with the United States.

Last but not least, nuclear weapons are now a source of domestic legitimacy, a crucial element of North Korean national identity, as its revised Constitution stipulates itself as a “nuclear weapons state.” Its identity as a nuclear state and earning international recognition are the raison d’être of the regime, and failure to achieve this would signal weakness to the rest of the country. For a young supreme leader without proven track records of leadership, it would be essential to find and establish a source of legitimacy in nuclear capabilities.

For these reasons, Kim Jong Un appears to be determined to push forward with advancing the nuclear and missile programs.

Spontaneous Marketization from Below in North Korea

Underneath the surface, however, North Korean society has been undergoing a remarkable transformation triggered by spontaneous marketization from below over the past two decades since the 1990s. Originally started as people’s survival means amidst the “Arduous March” period, during which hundreds of thousands North Koreans starved to death, markets have now become entrenched in their daily lives, practically replacing the defunct central planning and its Public Distribution System. Over 400 markets are now known to be up and running across North Korea, excluding small street vendors in villages and towns.

Under Kim Jong Il’s rein, Pyongyang’s policies towards spontaneous markets showed a ‘stop-go pattern,’ as they did play positive functions to sustain people’s livelihood when the state could not feed them. Thus, Pyongyang had no choice but to allow markets, reluctantly and implicitly. But when it felt markets were too flourishing to pose a potential threat to the regime, the authorities did not hesitate to repress them.

Under Kim Jong Un, however, there has been no sign of repressing markets so far. Rather, it appears that spontaneous markets take up one pillar of Byungjin, namely, economic stability, if not prosperity. For the past six years, the North Korean economy has muddled through with its growth rates estimated by the Bank of Korea to fluctuating between -1 to 4 percent, due in no small part to spontaneous markets.

Together with the marketization of North Korean society, another notable phenomenon is foreign information flows into the country. Digital innovation in information and communication technologies has facilitated covert flows of outside information into North Korea via digital devices such as DVDs, USBs, and SD cards, which spread mostly through markets and trigger changes in the minds of the North Korean people. Numerous surveys and interviews of North Korean refugees reveal that North Korean people’s exposure to outside information elicits positive changes in their beliefs and attitudes towards the outside world, South Korea and the United States in particular.

Inflow of foreign information weakens the regime’s monopoly on information, and when combined with the marketization from below, may induce gradual changes in North Korean state-society relationship. We do not expect, however, those changes should lead to North Korean people’s abrupt revolt against the Pyongyang regime. The Moon Jae-in administration, together with the United States, has made clear the so-called “three NOs”: we do not seek a regime change in North Korea; we do not seek the collapse of the Pyongyang regime; and we do not seek an accelerated reunification of the Peninsula.

Challenges Ahead – South Korea’s Two-Track Approach

North Korea is not a monolithic system as often presumed, in which a supreme leader and his closest cohorts maintain complete control over the entire society. Rather, it is an iceberg, a tip of which, namely, Kim Jong Un and his ruling elites, is on the surface attracting world’s attention through continual nuclear and missile provocations. Underneath the surface, however, separate dynamics are underway in the form of spontaneous marketization. When we deal with North Korea, therefore, it is important to keep eyes on both faces of North Korea. It is critical for us to assess those two portraits of North Korea to understand and address the persistent policy challenges in appropriate ways. And that is why South Korea is pursuing a two-track approach to the North Korean question. I would like to bring up three points in this regard.

First, for North Korea’s nuclear and missile programs, it is imperative for us to establish a credible deterrence capability. A robust Korea-U.S. alliance and the firm joint message that we have the will and capacity to defend ourselves are essential in preventing Pyongyang from making any dangerous miscalculation. Deterrence, however, by no sense means a military option in the form of a preemptive strike or preventive war.

In August, President Moon Jae-in made this clear by declaring that any U.S. military action against North Korea requires South Korea’s prior consent. He also presented a principled stance that South Korea would not respond to Kim Jong Un’s provocations by deploying or developing nuclear weapons.

Second, placing pressure through sanctions against the North is essential. The United Nations has stepped up economic sanctions condemning North Korea’s repeated nuclear and missile violations – most recently, the UN Security Council Resolution 2375 following the missile tests on 4th and 28th July this year. Bilateral sanctions have also accompanied UN sanctions.

There are some contending views about the effectiveness of sanctions: proponents argue that costs and pains caused by sanctions would eventually lead Kim Jong Un to give up the nuclear weapons programs, while skeptics cast doubt on their effectiveness. Some of them contend that slapping Pyongyang with additional sanctions would only encourage Kim Jong Un to sprint toward completing the development of a nuclear-tipped intercontinental ballistic missiles, giving him the rationale for further enhancing Pyongyang’s geopolitical imagination.

Sanctions per se, however thorough and tight they might be, may not be a fundamental solution to the North Korean nuclear and missile problem. When factored into Kim Jong Un’s own calculus, however, they will work as necessary conditions for changing his behavior by increasing the cost of North Korea’s nuclear ambitions and slowing the development of its capabilities. When considered complementary to negotiations, sanctions can be used as leverage that provides the Pyongyang regime with the promise of lifting sanctions as a negotiated quid pro quo.
Last but not least, we should keep the door wide open to negotiation and dialogue with Pyongyang – negotiation and dialogue that will prevent a possible collision course, that will put a freeze on North Korea’s nuclear and missile programs, and that will eventually lead to a nuclear-free Korean Peninsula.

Negotiation and dialogue could put the brakes on Pyongyang’s provocative path, while raising the chances of facilitating internal dynamics in North Korean society. When combined with peace agreements that guarantee North Korean regime security, they also present an opportunity to frustrate or at least weaken the geopolitical imagination of the Pyongyang regime.

In July, while delivering a speech in Berlin, President Moon Jae-in hinted at the pursuit of peace agreements on the Korean Peninsula in exchange for North Korea’s denuclearization. In his National Liberation Day speech on August 15, the President touched on putting a halt to Pyongyang’s nuclear ambitions by saying, “The resolution of the North Korean nuclear issue must start from a nuclear freeze.”

Using direct negotiations and economic engagement, in close coordination with the international community, it stands a good chance of deflecting Pyongyang’s current trajectory, or at a minimum, capping its current capabilities and rendering them less threatening by reducing hostilities. We look at a cap and freeze on North Korea’s nuclear and missile programs as a stage in the implementation of a deal. The end game would have to be a Korean Peninsula free of nuclear weapons.

Given the inner dynamics underway for the past two decades, rather than sudden regime change from within or through military action from outside North Korea, North Korea’s change is more likely to come gradually from within. But creating the conditions conducive to such internal change requires rigorous and enduring support from the outside.

Let us recall the Cuban Missile Crisis of 1962. A possible nuclear war was avoided through crisis communications between the United States and the Soviet Union, between John F. Kennedy and Nikita Khrushchev, through various media such as telegrams, private letters, envoys, and even open broadcasting.

Let us recall that the Soviet Union collapsed under its own weight through implosion from within, not through externally-derived explosion. Likewise, we heed close attention to spontaneous changes in North Korea from within. And that is the reason we are eagerly in need of your invaluable experience and accumulated knowledge on post-communist transition, particularly when we take a two-track approach towards the North, combining pressure and dialogue on a firm basis of deterrence.

Action in concert is power – associational and collaborative power distinctive from the conventional, instrumental powers whether they are hard or soft. As Hannah Arendt said, I quote, “Power springs up whenever people get together and act in concert, but it derives its legitimacy from the initial getting together rather than from any action that then may follow” unquote. Power is not the property of an individual, but of a plurality of actors joining together for some common political purpose. It is the outcome of collective engagement. I believe that this annual Korea-V4 Conference on Transition can provide a focal point, around which not only South Korea and Visegrad 4 countries, but also the international community can collaborate to coordinate their actions to address the North Korean question.

Thank you very much.